Correlation Between Citizens Financial and United Natural
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and United Natural at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citizens Financial and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group, and United Natural Foods,, you can compare the effects of market volatilities on Citizens Financial and United Natural and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citizens Financial with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and United Natural.
Diversification Opportunities for Citizens Financial and United Natural
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and United is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and United Natural Foods, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods, and Citizens Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citizens Financial Group, are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods, has no effect on the direction of Citizens Financial i.e., Citizens Financial and United Natural go up and down completely randomly.
Pair Corralation between Citizens Financial and United Natural
Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 1.17 times more return on investment than United Natural. However, Citizens Financial is 1.17 times more volatile than United Natural Foods,. It trades about -0.14 of its potential returns per unit of risk. United Natural Foods, is currently generating about -0.24 per unit of risk. If you would invest 28,490 in Citizens Financial Group, on October 11, 2024 and sell it today you would lose (1,663) from holding Citizens Financial Group, or give up 5.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group, vs. United Natural Foods,
Performance |
| Timeline |
| Citizens Financial Group, |
| United Natural Foods, |
Citizens Financial and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and United Natural
The main advantage of trading using opposite Citizens Financial and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, United Natural can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Natural will offset losses from the drop in United Natural's long position.| Citizens Financial vs. HDFC Bank Limited | Citizens Financial vs. Ita Unibanco Holding | Citizens Financial vs. Ita Unibanco Holding | Citizens Financial vs. Deutsche Bank Aktiengesellschaft |
| United Natural vs. Unity Software | United Natural vs. The Home Depot | United Natural vs. Nordon Indstrias Metalrgicas | United Natural vs. Citizens Financial Group, |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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